Lydall Updates 2007 Financial Results for Subsequent Event

MANCHESTER, CT -- (MARKET WIRE) -- 03/17/08 -- LYDALL, INC. (NYSE: LDL) today announced that its net income for the quarter ended December 31, 2007 was $2.4 million, or $.15 per diluted share, compared to net income of $2.9 million, or $0.18 per diluted share, previously announced in a press release on February 20, 2008. The previously announced financial results were updated to reflect a new litigation matter involving a former employee of the Company which occurred subsequent to the Company's previous earnings announcement.

On February 22, 2008, a former employee of the Company commenced an action in the Delaware Chancery Court seeking advancement and indemnification from the Company of approximately $0.9 million. The amount sought is for income taxes that he is expecting to incur as a result of payments made by the Company in 2007, related to a previous litigation matter. Management concluded that it was probable that a loss had been incurred by the Company as of December 31, 2007. Based on management's estimates at this time, the Company recorded expense of approximately $0.9 million (pre-tax) during the quarter ended December 31, 2007, related to this matter. The expense was recorded in corporate office selling, product development and administrative expenses.

Lydall, Inc. is a New York Stock Exchange listed company, headquartered in Manchester, Connecticut. The Company, with operations in the U.S., France, and Germany and sales offices in the U.S., Europe, and Asia, focuses on specialty engineered products for the thermal/acoustical and filtration/separation markets.

Cautionary Note Concerning Factors That May Affect Future Results

Stockholders are referred to Lydall's 2007 Annual Report on Form 10-K, "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Cautionary Note Concerning Factors That May Affect Future Results," and "Risk Factors" which outline certain risks regarding the Company's forward-looking statements. Such risks include, among others: a major downturn of the automotive market, which accounted for approximately 52 percent of Lydall's 2007 net sales, dependence on large customers, pricing pressures from OEM automotive customers, changes in raw material pricing and supply, specifically, aluminum and other metals used in most of the Company's heat-shield products, various fibers used in thermal/acoustical and filtration/separation products. In addition, increases in energy pricing, inherent risks at international operations, the timing and performance of new-product introductions, compliance with environmental laws and regulations, outcomes of legal contingencies or assertions by or against the Company relating to intellectual property rights, changes in tax laws and rates, and strategic transactions can impact Lydall's projected results.

For further details on these risks and other pertinent information on Lydall, copies of the Company's Forms 10-K, 10-Q and 8-K are available on Lydall's web site, www.lydall.com. Information may also be obtained from the Company Contact: Thomas P. Smith, Vice President, Chief Financial Officer and Treasurer, at One Colonial Road, Manchester, CT 06042; Telephone 860-646-1233, email: investor@lydall.com

Summary of Operations In thousands except per share data

Quarter Ended Year Ended December 31, December 31, ----------------------- ---------------------- 2007 2006 2007 2006 ========== =========== ========== ========= (Unaudited) (Unaudited) Net sales $ 85,858 $ 80,601 $ 338,894 $ 326,358 Cost of sales 65,474 62,208 262,759 253,561 ---------- ----------- ---------- ----------Gross margin 20,384 18,393 76,135 72,797 Selling, product development and administrative expenses 16,334 14,930 60,105 57,466 ---------- ----------- ---------- ----------Operating income 4,050 3,463 16,030 15,331 Interest expense 138 225 490 1,363 Other expense (income), net (92) 14 (140) (27) ---------- ----------- ---------- ----------Income before income taxes 4,004 3,224 15,680 13,995 Income tax expense 1,584 1,099 6,573 3,767 ---------- ----------- ---------- ----------Net income $ 2,420 $ 2,125 $ 9,107 $ 10,228 ========== =========== ========== ========= Basic earnings per common share $ 0.15 $ 0.13 $ 0.56 $ 0.63 Diluted earnings per common share $ 0.15 $ 0.13 $ 0.55 $ 0.63

Weighted average common shares outstanding 16,380 16,145 16,295 16,147 Weighted average common shares and equivalents outstanding 16,422 16,193 16,472 16,198

Summary of Segment Information In thousands

Quarter Ended Year Ended December 31, December 31, ----------------------- ---------------------- 2007 2006 2007 2006 ========== ========== ========== ========= (Unaudited) (Unaudited) Net Sales

Thermal/Acoustical $ 57,980 $ 54,232 $ 227,813 $ 222,003 Filtration/Separation 21,005 19,155 82,966 74,906 Other Products and Services 7,366 7,855 30,378 31,971 Reconciling Items (493) (641) (2,263) (2,522) ---------- ---------- ---------- ---------- Consolidated Totals $ 85,858 $ 80,601 $ 338,894 $ 326,358 ========== ========== ========== ========= Operating Income

Thermal/Acoustical $ 6,671 $ 5,441 $ 22,508 $ 23,193 Filtration/Separation 1,540 794 8,550 4,566 Other Products and Services 285 742 1,767 3,038 Corporate Office Expenses (4,446) (3,514) (16,795) (15,466) ---------- ---------- ---------- ---------- Consolidated Totals $ 4,050 $ 3,463 $ 16,030 $ 15,331 ========== ========== ========== ========= Financial Position In thousands except ratio data December 31, December 31, 2007 2006 =========== ========== Cash and cash equivalents $ 15,716 $ 6,402 Working Capital $ 63,506 $ 50,610 Total debt $ 9,829 $ 10,106 Stockholders' equity $ 180,453 $ 161,217 Total capitalization $ 190,282 $ 171,323 Current ratio 2.4 2.2 Total debt to total capitalization 5.2 5.9

Cash Flows In thousands Quarter Ended Year Ended December 31, December 31, ------------------------ ------------------------ 2007 2006 2007 2006 =========== =========== =========== ========== (Unaudited) (Unaudited)

Net cash provided by operating activities $ 11,910 $ 14,699 $ 22,133 $ 39,703 Net cash used for investing activities $ (5,830) $ (3,686) $ (14,610) $ (11,182) Net cash (used for) provided by financing activities $ (333) $ (6,799) $ 1,231 $ (25,183) Depreciation and amortization $ 3,816 $ 3,710 $ 15,227 $ 15,439 Capital expenditures $ 5,830 $ 3,686 $ 14,610 $ 11,182

Common Stock Data Quarter Ended December 31, 2007 2006 =========== ========== High $ 11.70 $ 11.19 Low $ 9.20 $ 8.56 Close $ 10.52 $ 10.81

During the fourth quarter of 2007, 4,115,725 shares of Lydall common stock (LDL) were traded on the New York Stock Exchange.

Company Contact: Thomas P. Smith Vice President, Chief Financial Officer and Treasurer One Colonial Road Manchester, CT 06042 Telephone 860-646-1233 email: investor@lydall.com

2008-03-17 16:31:53 0314344 MARKETWIRE